Further weakness as Nanjing Chemical Fiber (SHSE:600889) drops 11% this week, taking three-year losses to 18%

Nanjing Chemical Fiber Co., Ltd. (SHSE:600889) shareholders should be happy to see the share price up 28% in the last month. If you look at the last three years, the stock price is down. But that's not so bad when you consider its market is down 21%.

With the stock having lost 11% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

See our latest analysis for Nanjing Chemical Fiber

Given that Nanjing Chemical Fiber didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last three years, Nanjing Chemical Fiber saw its revenue grow by 2.2% per year, compound. Given it's losing money in pursuit of growth, we are not really impressed with that. While the stock is down 6% per year over the same period, that's actually not bad. So it seems plausible that the market sentiment has remained optimistic, given the fairly modest revenue growth, and current lack of profits. As the company progresses towards profitability, there may be a buying opportunity.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

Take a more thorough look at Nanjing Chemical Fiber's financial health with this free report on its balance sheet.

A Different Perspective

We're pleased to report that Nanjing Chemical Fiber shareholders have received a total shareholder return of 12% over one year. That's better than the annualised return of 1.3% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Nanjing Chemical Fiber better, we need to consider many other factors. To that end, you should be aware of the 3 warning signs we've spotted with Nanjing Chemical Fiber .

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.